Arizona Real Estate Market Benefits From New Tax Plan

There remains a good deal of confusion about the new tax plan put in place for 2018 as the new associated regulations trickle out. My tax accountant, Dan Dipomazio, CPA, is working hard to stay on top of those incoming regulations and keeping me informed about the real life consequences to my specific situation. A NY Times opinion piece in todays Review section articulates my theory about how the Arizona real estate market benefits from the new tax plan.

‘New caps on the home mortgage interest and state and local tax deductions have pushed up the costs of housing in expensive cities like San Francisco, Los Angeles and New York City…deflecting talented workers to relatively affordable cities like Phoenix, Houston, Atlanta, and Charlotte, NC.’ The more affordable housing market in Arizona, just got significantly MORE affordable.

Take for example, my clients moving from New York to Phoenix later this month. Terry and Jules sold their 1300 square foot home on Long Island where they were paying close to $9,000 per year in property taxes. Whereas that whole amount of property tax, as well as all of the income tax that they paid per year was deductible from their federal tax bill, they are now capped at a $10,000 deduction for both combined. The 2200 square foot home they are buying in Gilbert, has a tax bill of just over $2000 a year, and the property tax they expect to pay will barely get them to the $10,000 deduction cap. That is significant and illustrates how the Arizona real estate market benefits from the new tax plan.

Now, if we could just get more inventory for those seeking relief from a selectively overly burdensome tax plan, we’ll see the real potential for the Arizona real estate market to benefit from the new tax plan. Here is the latest list of currently available homes in the east valley up to $750,000: